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Chinese Digital Assistants Dominate China, Soon the World?

· January 29, 2019

We might not have flying cars, but consumer tech is rapidly catching up to the world of science fiction. Today’s smart speakers have us talking to our devices like we are on Star Trek’s Enterprise. Companies are seeing opportunities to integrate this new technology in many different consumer devices. As life begins to emulate fiction, we have to wonder: are the digital assistants of the future American, or Chinese?

While the U.S. is usually a worldwide leader in high tech, especially software and services, Asian companies are quickly closing the gap. Indeed, China is an excellent “state-owned” incubator for home-grown digital assistants, partly because it is a protected market and partly because it is home to hundreds of dialects. Foreign competition is almost non-existent in China, which has the second biggest consumer market in the world next to the U.S.

The rise of Chinese digital assistants benefits from a serendipitous confluence of events. A flood of cheap speakers from China is making it hard for U.S. companies to justify producing their own hardware. At the same time, companies are anticipating a rise in demand for digital assistants, as seen at this year’s CES where digital assistants were to be found everywhere you looked.

Tencent’s recently announced assistant Xiaowei will soon be added to their messaging service WeChat, a product with over a billion users. The assistant will help users with simple tasks and connect to other apps, those owned by Tencent and certain third-party apps like shopping platform Meituan Dianping and ride hailing service Didi Chuxing. That’s a lot of data that Tencent will have access to. Tencent is in a major push to get more companies to use its services, and is hoping to attract retailers by providing them with facial recognition technology and customer management services.

Other notable products include Alibaba’s Tmall Genie X1 and Baidu’s DuerOS, a digital assistant platform that powers products such as the Raven H, Little Fish, and PopIn. These Chinese companies are increasingly competing with American companies for the same markets and partners. Research firm CB Insights believes that Chinese firms may be thinking of international expansion, but face a challenge in needing foreign language user data to localize their products. They predict that partnerships, investments, and/or acquisitions are likely already in the works to obtain this data and further expansion goals.

Security concerns may give cause to temper predictions of Chinese success. Reports suggest the EU is considering toughening its stance on China due to security risks related to trade secret theft and espionage. EU tech official Andrus Ansip recently expressed fears that Huawei and other Chinese companies could be ordered by intelligence services in Beijing to carry out actions such as building electronic “backdoors,” although China and Huawei have rejected these concerns. Escalating concerns among U.S. policymakers about Huawei and ZTE may also result in policies that stunt overseas prospects of Chinese voice assistants. It wouldn’t be surprising to see future trade barriers imposed on Chinese devices coming into Europe as a result of these developments.

Outside of China, voice assistants from other Asian countries are already making their mark in the U.S. Samsung, based in South Korea, is making a major push with its product Bixby. Samsung is expanding Bixby’s reach to TVs, washers, and refrigerators. The digital assistant is a staple on Samsung’s smartphones, many of which have a dedicated Bixby button.

It’s not unusual that Asian tech firms are on the rise. DisCo reported on the rise of Chinese tech last year. What is noteworthy, however, is the potential for Chinese companies to dominate what is becoming an important market, either on their own or through key partnerships. With the exception of features like Siri and Cortana, which users have been somewhat slow to adopt, we are not yet talking to our computers like they do in science fiction, but digital assistant features are quickly catching up to user expectations. The question remains, who will be making these devices of the future?

Competition

Some, if not all of society’s most useful innovations are the byproduct of competition. In fact, although it may sound counterintuitive, innovation often flourishes when an incumbent is threatened by a new entrant because the threat of losing users to the competition drives product improvement. The Internet and the products and companies it has enabled are no exception; companies need to constantly stay on their toes, as the next startup is ready to knock them down with a better product.